Churn Prediction Presentation

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Churn Prediction

Understanding and Reducing


Customer Attrition
Your Name
Date
What is Churn?
• Definition:
• Customer Churn refers to the rate at which
customers stop doing business with a
company.
• Importance:
High churn rate can lead to revenue loss,
reduced market share, and increased
acquisition costs.
Types of Churn
• • Voluntary Churn: When customers choose to
leave (e.g., cancel a subscription).
• • Involuntary Churn: When customers leave
due to issues beyond their control (e.g.,
payment failures).
Importance of Churn Prediction
• • Helps companies understand why customers
leave.
• • Enables proactive measures to reduce
churn.
• • Cost-effective: Retaining customers is
cheaper than acquiring new ones.
Data Used in Churn Prediction
• • Demographic Data: Age, gender, location.
• • Behavioral Data: Usage patterns,
engagement level.
• • Transactional Data: Purchase history,
payment methods.
• • Feedback Data: Customer reviews, surveys,
support tickets.
Churn Prediction Methods
• • Traditional Methods:
• - RFM (Recency, Frequency, Monetary)
Analysis
• - Cohort Analysis
• • Machine Learning Models:
- Decision Trees
- Logistic Regression
- Random Forest
- Neural Networks
Machine Learning Workflow
• 1. Data Collection: Collect relevant customer
data from multiple sources.
• 2. Data Preprocessing: Handle missing values,
normalize data, and feature selection.
• 3. Model Training: Use algorithms like Logistic
Regression, Random Forest, etc.
• 4. Evaluation: Accuracy, Precision, Recall, F1
Score, ROC-AUC Curve.
• 5. Deployment: Integrate with business
processes to monitor live data.
Common Metrics in Churn
Prediction
• • Accuracy: The percentage of correct
predictions.
• • Precision: The percentage of positive
predictions that are correct.
• • Recall: The percentage of actual churners
that were correctly identified.
• • F1 Score: Harmonic mean of precision and
recall.
• • ROC-AUC: The ability of the model to
distinguish between churn and non-churn.
Reducing Churn: Strategies
• • Improve Customer Support: Fast and
efficient customer support can resolve issues
that lead to churn.
• • Personalization: Use customer data to tailor
services and offers.
• • Loyalty Programs: Encourage customer
retention with incentives.
• • Feedback Systems: Collect feedback to
identify problems early.
Challenges in Churn Prediction
• • Data Quality: Incomplete or biased data can
affect the accuracy.
• • Interpretability: Some models like Neural
Networks are complex to interpret.
• • Changing Customer Behavior: Constant
monitoring is needed to adapt to new
patterns.
Conclusion
• • Churn prediction is crucial for businesses
that rely on customer retention.
• • Machine learning can provide accurate,
actionable insights.
• • Reducing churn leads to significant long-
term growth.
Q&A
• Open the floor for any questions from the
audience.

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